BlackRock Inc., the world’s biggest money manager, and Pacific Investment Management Co. are among investors that sued banks including Citigroup Inc. and Deutsche Bank AG over their roles as mortgage-bond trustees, Bloomberg News reported yesterday. The banks knew the loans underlying trillions of dollars worth of residential mortgage-backed securities were misrepresented and failed to invoke their rights to force the sellers to buy them back or act against servicers, causing billions of dollars in losses, according to copies of the complaints reviewed by Bloomberg News. The filings couldn’t be immediately confirmed yesterday in New York State Supreme Court in Manhattan. Bank of New York Mellon Corp. “negligently failed to protect the trusts and certificate holders,” according to a copy of the complaint against the New York-based company. “BNYM and its responsible officers knew of pervasive, material breaches of originators’ and RMBS sponsors’ representations and warranties, and loan servicers’ material breaches, yet did nothing to protect the trusts,” according to the court filings.
